What is an Amicable Separation Agreement?
An amicable separation agreement is a legally binding settlement that ends a marriage or civil union, where the couple has agreed on its terms. It essentially means that both partners have come to a mutual understanding on the key issues of their separation, including child custody arrangements, property settlements, financial settlements, and spousal maintenance, amongst other matters. It is a document that both parties are in agreement with, will be able to live with going forward , and will be effective until the circumstances of your relationship change in the future.
An amicable separation agreement is different to a regular separation agreement in that it suggests that both parties have come to an agreement without the involvement of the Family Court or external mediators. Alternatively, a regular separation agreement is often a settlement reached through the Family Court process, or a parenting order mediation process, between the parties, and then filed with the Family Court for approval. Above all else, an amicable separation agreement invokes mutual intent between both parties to act peacefully and kindly towards each other, which can potentially set the tone for your future dealings.
The Advantages of an Amicable Separation Agreement
An amicable separation agreement has many benefits to both parties. An amicable separation agreement will, almost always, minimize conflict between parties, usually costing less in legal fees and settling matters much quicker as there is no litigation and less back-and-forth between the parties.
Because the parties are more likely to have settled on the issues without interference from third parties their legal fees will be reduced. Most importantly, the parties are usually much less emotionally involved in the issues. The former spouses will be relieved to settle on an agreement that will allow them to get past the feelings of anger and hurt towards each other that often accompanies leaving one another.
The Essential Elements of an Amicable Separation Agreement
The primary components that we experience in most of the amicable separation agreements we prepare include:
Asset Division and Distribution
One of the primary components of any separation agreement is the division of assets. In order to distribute property, it must first be valued. As a general rule, assets are valued as of the date of separation.
We always caution clients to use caution when dividing assets that are no longer in existence. We encountered one case where the parties divided the value of their 401K plan on the day of separation only to find that one spouse had taken a loan against the account. The parties were then forced to further divide the shares of the 401K plan to make up for the loan taken by the party who kept the 401K account but neglected to advise her attorney of the loan.
Child Custody and Visitation
Child custody is another crucial component of a separation agreement. This component generally breaks down into three categories:
Spousal Support or Alimony
Another important, and often the most contested component of any separation agreement, is support. Support includes alimony and child support. In New Jersey, how a divorce case is assigned to the court determines whether or not a Judge will hear the matter. In cases where a Judge is assigned to a matter and the case has not been settled through litigation or mediation, any motion for support will need to be considered by a Judge. In all other cases, the assignment of a Judge to your case does not follow you throughout the process of your divorce. In these cases, you may maintain control over your support determination.
An essential element to any separation agreement is the dissemination of tax consequences to each party resulting from the decision to accept the terms of the agreement. Certain assets will impact tax returns. For example, any retirement assets that are divided without a Qualified Domestic Relations Order (QDRO) will trigger tax liability. In addition, certain assets have tax implications in the form of capital gains taxes. Other assets, like support, mortgage interest and property taxes may have tax benefits to the recipient. It is important to include the tax implications in any agreement in order to allow each party to understand the true value of creating an amicable separation agreement.
Constructive Notice
A separation agreement, like any other contract, requires constructive notice. This means that the parties entering into the agreement must be aware of its terms and their rights under the law. This includes, among other things, their understanding of their obligations under the law and how the terms of the agreement effect those rights.
How to Create an Amicable Separation Agreement
An amicable separation agreement still needs to be drafted in a legally competent way. Drafting an amicable separation agreement is the process by which the spouses negotiate the terms of their agreement before having it written out by a lawyer. This lawyer is often referred to as a "drafting lawyer". Often, in this case, neither party has any objection to such an amicable method of drafting their separation agreement. In fact, it allows for both the spouses themselves to agree on the terms of their agreement and to have a say in it. The role of the "drafting lawyer" is to ensure the parties understand the provisions of the agreement they are about to sign. The "drafting lawyer" will often sit with the clients and explain the terms to them to ensure they have a thorough understanding, or alternatively, will send the Agreement to the clients after it has been drafted by the drafting lawyer. The drafting lawyer will then provide an opinion letter (opinion letter) explaining the substance of the agreement. This gives the client and her lawyer an opportunity to come back with comments and/or questions. After this, the drafting lawyer and one of the spouses and their lawyer will sit down together and discuss (i) any comments made and, (ii) any further explanation required. It is only once the spouses are satisfied that they sign the document. The content of an amicable separation agreement is similar to that of other separation agreements. The most important aspect of the amicable separation agreement is that its content is agreed to by both spouses and it is drafted in accordance with any applicable legislation. Often, however, an amicable separation agreement is less detailed than a negotiated separation agreement. In all circumstances, the most important aspect is that the separation agreement be evaluated by the other spouse’s lawyer before it is signed.
Typical Challenges and Solutions
Amicable separation leads to a lot of great things: a solution with little long-term negative effects, a clean break between spouses, and more often than not, a divorce in agreement.
Nevertheless, a few main challenges usually rear their heads when creating an amicable separation agreement: finding the right person to mediate and negotiate the agreement, determining the framework for the household during separation, and making sure the terms are equitable.
David Heller, family law specialist at Torkin Man LLP in Toronto, Ontario, explains, "the number one challenge for people is finding the right mediator and negotiator, someone they trust and is neutral. The second challenge is keeping the process moving forward."
Both of these challenges come from families trying to maintain amicable separation and avoid negativity while dealing with the separation, often at the expense of being expediently efficient.
"We always believe the bigger the team, the greater chance of reaching resolution. The bigger the professional team, the more likely to keep everyone honest, just moving forward without the need for animosity."
To fill the hole when there’s not much negotiation going on, people can go online and either do a web search to see local mediators or look on sites like Facebook and Instagram to see who their friends and networks suggest. If a friend went through a similar situation, they will be more than happy to recommend a mediator relationship.
These days, people love to look for recommendations on Facebook. If you do a post saying "I’m working through a separation agreement and I need a lawyer or a mediator, do you know anyone good," it’s guaranteed you will get dozens of recommendations. A lot are from people with whom you’ve had a good relationship, and almost none are from people you don’t want to hear from.
"People love to talk about their positive experiences through separation, they don’t boast about how horrible it was," Heller explains. "The hardest problem on lawyers and accountants is usually getting the client to stop talking to everyone else. Everyone thinks they are a lawyer and they will tell them what to do . "
Beyond that, people usually get lost on how to keep the house running during separation – people might think it not necessary to continue the regular cleaning and maintenance during separation when it costs when they’re not sharing the expenses. But if the payees and recipients are used to having a certain kind of lifestyle, that lifestyle needs to be protected – and if someone gets moved out halfway through the school year, it can completely upset their studies.
Maintaining soccer practice, piano lessons, maybe eating out a little more because there’s only one person at home to make meals, keeping the pool clean, and maintaining the house – keeping the house going as it has been is one of the most painful conversations for separating couples coming to a peaceful arrangement.
"The third challenge, and it’s both spouses’ primary concern, is always equitable throughout the entire agreement: financial support for partners, child support, division of assets and pension. It’s always about division of assets and pensions, very few people think that partnership and residence and children are going to consume more of the estate," he says, in contrast to property where one partner built a house and the other put in all the money and never applied a lick of drywall.
People almost always hold onto property, "the value of the assets they are potentially losing, and they make the other partner’s life miserable … 10-year blades of grass," he explains.
Heller compares it to selling the house during separation, "it’s how much can we get, not how much do we have to pay." Couples, therefore, need to compromise on luxury items and let them go if they have to so they can remain amicable through the process.
"As long as people realize coming together as a family and working towards resolution is really what they are looking for, you won’t fight about the other stuff."
For Canadians who think they can sit down with their spouse and go through a separation agreement with no problem, it’s important to acknowledge that challenges will arise. Speaking to a professional mediator or family lawyer during the process can help you reach an amicable outcome.
Legal Factors and Finalizing the Agreement
When embarking on the path of amicable separation, understanding the legal implications of the agreement is crucial. The enforceability of an amicable separation agreement can often depend on how it is drafted and formalized. Every individual has unique circumstances that dictate the obligation they have to one another, both during the period of their separation and in the future.
There are some issues that must be agreed upon if your relationship ends, such as how properties and debts are divided, how and where the children will spend vacations, and what contact there will be with mutual friends and family throughout the process. To make the process go smoothly, it is important to follow long term planning, wealth preservation, custody, guardianship, spousal support and child support guidelines, and that they are agreed upon by both parties. It is also necessary to be familiar with the law in your province or territory, and how it may affect your situation.
During the amicable separation process, both individual’s assets will need to be disclosed, and the separation agreement will likely need to be reflected in a court order. Court approval of a separation agreement will ensure that the agreement is legally binding and enforceable in the event terms are not followed. While it may be tempting to skip the court’s review and approve the agreement as a private contract, it is important that you proceed with understanding that any out-of-court agreements are not enforceable without the court’s approval. Both parties should consult with separate, independent legal counsel who has expertise in family law in order to ensure the process is fair for both parties. Full financial disclosure will likely need to be provided to each party’s legal counsel at the outset of the process, in order to avoid future disputes about assets and debts.
In Canada, separation agreements cannot be registered against a land title, and do not have priority over a registered divorce order. In order to protect the enforceability of the agreement, it should be drafted and registered against the land title, or registered as a lien against the property; and it should be filed with the appropriate division of the court.
Although amicable separation agreements can ensure the best interests for all parties involved, they must come with an understanding of the legal framework in your province or territory and approved by the appropriate division of the court.
Case Examples of Effective Amicable Separations
To give you a clearer picture of amicable separation, here are some real-life case studies of couples who navigated this process successfully:
Case Study 1 – Short-term Marriage
John and Mary were married for two years before they decided to separate. Although their marriage was short, they still shared several assets and incurred various debts. The couple agreed from the outset to divide everything equally, and once they knew the "bottom line," each of them took a share of it. They went through as many issues as they could outside of court, but when they both realized that selling their family home would be difficult to do without legal intervention, they hired a mediator to handle the process, which concluded in a day.
Looking back, John and Mary feel that amicable separation suited their situation and that it saved them money. The only part of their separation that required more effort was the division of joint accounts. In the end, however, they both got what they wanted. The couple could establish visitation rights quickly because there were no children, and by creating a parenting plan that worked for them, they could spend more time with their son.
Case Study 2 – Long-Term Marriage
Tom and Sara were married for 15 years and shared three children. Although they were extremely busy over the year that they were separated and finalized their divorce , things went smoothly, and they went to court for the final time in September. Tom and Sara believe that the advantages of amicable separation helped them get through all of this easily, but Sara in particular thinks that the fact that their kids were older than most others also helped things through the process.
Like most long-term marriages, Tom and Sara encountered many issues that required a great deal of time to resolve. Among these were the following:
Tom and Sara looked at their priorities when dividing property and assets. Lying around somewhere was a piece of paper where they had written down what each other thought was most important in the settlement. This greatly assisted them when decisions about assets needed to be made, such as those regarding vehicles, real estate, and their three kids.
Overall, the amicable separation process saved Tom and Sara quite a bit of money and they believe that it kept the transition easier on their children, thus preventing them from being caught in the middle. Neither of them felt the need or desire for revenge since they agreed on quite a few things, and they were able to work well as a team throughout the process.